TOLLING AGREEMENT
This Tolling Agreement (the "Tolling Agreement") is made as of the 24th day
of November 1999 by and among Party City Corporation, a Delaware corporation
(the "Company") and each of the investors listed on the signature pages hereto
(the "Investors"). Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed thereto in the Securities Purchase Agreement dated as
of August 16, 1999 (the "Purchase Agreement") by and among the Company and the
Investors.
1. By letter (the "Letter") dated November 23, 1999 (a copy being attached
hereto), the Investor Agent notified the Company of certain Events of Default
pursuant to the Purchase Agreement (the "Specified Defaults"). The Company
acknowledges and confirms that all Events of Default specifically noticed in the
Letter constitute Events of Default and acknowledges that the Investors and the
Investor Agent could rightfully exercise all rights remedies and privileges of
enforcement against the Company by virtue of such specified defaults.
2. The Investors are also, on or about this date entering into a consent
agreement (the "Consent"), whereby the Investors are consenting (subject to the
terms and conditions of the Consent) to the terms of a First Amendment to Vendor
Forbearance and Standstill Agreement (the "Vendor Agreement") by and between the
Company and its Vendors (as that term is defined in the Vendor Agreement).
3. The existence of the Specified Defaults could lead to the occurrence of
a new Credit Termination Date (as that term is defined in the Intercreditor
Agreement dated as of July 1, 1999), which would be contrary to the intention of
the Investors in entering into the Consent.
4. To avoid that result, the Investors, by their agreement hereto, agree to
delay the effectiveness of the Specified Defaults (the "Effective Date") until
the earlier of January 15, 2000, or the Refinancing Date (as the term is defined
in the Vendor Agreement).
5. The delay specified in paragraph 4 hereof shall not constitute a waiver
of any Specified Default but shall merely delay the effectiveness of such
Specified Default. On the Effective Date the Specified Default shall be in full
force and effect and the Investors and the Investor Agent shall be entitled to
exercise all rights and remedies by virtue of such Specified Default.
6. Nothing in this Tolling Agreement shall constitute a waiver or delay of
any other defaults, events of default or Termination Events (as that term is
defined in the Intercreditor Agreement) whether now existing or hereafter
arising, the reoccurrence of a Specified Default after the date hereof, or any
other rights and remedies the Investors or the Investor Agent may at any time
have.
7. This Tolling Agreement shall be subject to the execution of the Vendor
Agreement and the Consent by all parties, the satisfaction of all conditions to
the effectiveness of the Vendor Agreement and the Consent, and the waiver of any
presently existing defaults and events of default and Termination Events by the
parties to the Intercreditor Agreement, other than the Investors, and the
Investor Agent.
8. This Agreement shall be governed by the law of the State of New York.
9. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute the
Agreement. PARTY CITY CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: CFO
INVESTORS:
ENHANCED RETAIL FUNDING, LLC,
for itself and as Investor Agent
By: /s/ Xxxx X. Xxxxxxxxx
-----------------------------
Name: Xxxx X. Xxxxxxxxx
Title: CFO & Mgr.
SPECIAL VALUE BOND FUND, LLC
By: SVIM/MSM, LLC, as Manager
By: Xxxxxxxxxx & Co., LLC,
as Managing Member
By: /s/ Xxxxxxx X. Xxxxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: as Managing Member
TCO/PARTY CITY, LLC
By Xxxxxxxxxx & Co., LLC
By: /s/ Xxxxxxx X. Xxxxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Managing Member
XXXXXXX XXXXX & CO.
By: /s/ Xxxx Xxxxx
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Name: Xxxx Xxxxx
Title: Authorized Signer
XXXXXXX SACHS CREDIT PARTNERS, L.P.
By: /s/ Xxxx Xxxxx
------------------------------
Name: Xxxx Xxxxx
Title: Authorized Signer
RICHMOND ASSOCIATES, L.P.
By: /s/ MHM Management Inc.
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Name: Xxxxxxx X. Xxxxx for Xxxx X. Beige
Title:
XXXXX STREET INVESTMENTS
By: /s/ Xxxxx Xxxxxx
------------------------------
Name: Xxxxx Xxxxxx
Title: Manager
